Tougher new payment rules
The Cabinet Office has announced that contractors must pay at least 85 per cent of invoices within 60 days or be barred from bidding for contracts.
The rules, coming into effect in April 2021, increase the current payment provision threshold of 75 per cent, with a view to increasing it further over time, up to 95 per cent.
Steve Bratt, ECA CEO, said, “While tightening the payment requirements is a positive move and is to be applauded, let’s not forget that the law already requires payments on public contracts to be made within 30 days.
“Prompt and fair payment are essential to ensure the health of the construction supply chain, particularly in the current commercial environment, and 30 days should be the aspiration.”
Rob Driscoll, ECA director of business and legal and Chair of the Cabinet Office SME Adviser Panel Payment Group , added, "The group wholly supported the tightening of the initiative at a time when payment periods could threaten the survival of vital supply chains.
"Whilst improvements remain to be made, public sector accounts for 35 per cent of demand and ensuring procurement excludes poor performers is vital for behavioural improvement.”
Watch the recent CLC webinar regarding the Government Procurement Portal here.